By Philip Blenkinsop

BRUSSELS (Reuters) - Belgium's Solvay (SOLB.BR: Quote, Profile, Research) forecast a decline in full-year earnings after an 8 percent fall in first-quarter operating profit on Tuesday as its drugs arm failed to make up for weakness in chemicals and plastics.

Solvay's shares, broadly flat before the results, were down 3.6 percent at 1200 GMT, against a 0.4 percent rise in the DJ Stoxx European chemicals index .

Recurring earnings before interest and tax (REBIT) amounted to 300 million euros ($463.7 million), compared with the average forecast of 297 million euros in a Reuters poll of 10 analysts.

Revenue was flat at 2.37 billion euros, against an average poll forecast of 2.40 billion. Net profit increased by 1 percent to 220 million euros.

High energy and raw materials costs squeezed chemical and plastics margins, while a 14 percent slip in the value of the dollar limited sales growth across the company.

Vinyl plastics faced increasing price competition from U.S. imports.

Solvay, the world's leading maker of soda ash, used principally for glass, said pharmaceuticals should increase its operating profit in 2008 from last year, but that its industrial activities would fail to do so.

"On the whole for the year 2008 and taking into account the current level of the U.S. dollar, the Solvay group is unlikely to reach the record result of the year 2007," it said in a statement.